Wednesday, November 13, 2019

Chinese LNG Sector Growth to Continue

October 10, 2019

Graph: VesselsValue

China is at the forefront of the large LNG sector growth and is emerging as the largest source of new LNG demand growth and second largest importer of LNG, VesselsValue revealed.

China’s natural gas consumption has surged amid a gasification program and plan that is shifting millions of households and a large number of factories to natural gas from coal, said the report.

Greece and Japan dominate in terms of USD value. Greece has recently overtaken Japan as the top owning country, ordering a large number of vessels since 2018.

However, we have seen China emerge in the LNG market owning a total of USD 5.9 billion of Large LNG assets, which equates to about 13% of the top 5 owning countries.

China currently owns a total of 45 vessels with over half of them being younger than 2 years old (including NB) so alongside the Greeks, they own a young fleet benefiting in the future market.  

ICBC own the highest value of the fleet with their 10 vessels totaling a VV value of over USD 1.7bn.

Historically South Korea has always been the favorable country to build LNG vessels at and with the mega merger of HHI and DSME, China began to feel the pressure. However, a shift is occurring, the Gas market is starting to invest more money into Chinese yards, out of the 127 vessels due to go online in the next 3 years, 17% will be built at a Chinese yard, 75% South Korea and the rest Japan.

China are starting to directly compete with S.Korea for these high net assets and over the next few years we expect the Chinese to increase competition with South Korea / Japan and the number of Gas newbuilds in Chinese yards to increase dramatically.

The Chinese yard Hudong Zhonghua has benefited from the recent positive developments in the large LNG sector with orders placed by CSSC, CNOOC, MOL and China Shipping over the past few years.

Eight MOL and CSSC, 174k CBM vessels, delivery between 2020 and 2021 are currently being constructed in this yard with a total VV value of USD 1.4 billion.

China is making the move in the LNG market and taking advantage of the sector development. China’s gas power plan is transitioning from the conventional energy sources such as Oil and Coal into LNG.

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